Where the UK Leads, the EU Should Follow

Barriers to economic growth beware! This week's second reading of the Deregulation Bill marked another clearout of roadblocks to the creation of jobs and wealth. Hundreds of regulations have already been modified or removed, and the Bill is more ambitious still in improving and sweeping away thousands more. But with eurozone growth still sluggish, and a UK in-out referendum on the cards, now is the time for serious deregulatory reform in Europe too. Fortunately, the increasingly evident success of the UK's 'Plan A' (in contrast to the abject failure of French socialism under President Hollande) can only bolster the pragmatic supply-side reform movement. In short, we need to increase the EU's competitiveness, to increase our own. From 1998-2009, EU legislation was responsible for around 72% of the cost of regulation in the UK.

Churchill once said, "If you have ten thousand regulations, you destroy all respect for the law." You also destroy competitiveness. Europe, then, urgently needs targeted reductions in the swathes of regulatory burdens that are stopping people all over the EU from getting back to work. To secure this reform, we need to continue building alliances in Europe with those politicians, citizens and businesses who also want a better EU: a single market, not a single state. The EU institutions - particularly the red tape-loving European Parliament - have become divorced from the reality of Europe, its real people, its real lives. In the end, reality always bites.

Barriers that hinder innovation and the EU's overall competitiveness, its entrepreneurs, employers and exporters need to be addressed as urgently at the European level as they are being tackled in the UK. The October report of the prime minister's business taskforce, with its "COMPETE" principles for better regulation and 30 recommendations for reducing the burden, shows exactly what could be done. And the public outcry, particularly from the United Kingdom, that led to 'discards' rules being swept away from fisheries policy shows that - with enough pressure - Brussels will respond.

Fortunately, our enthusiastic demand for serious EU reform has filtered through into other member states. We might even say it has been embraced by some. Latent EU reformists have been enabled and emboldened to get onto the front foot in arguing for a better Europe of economic success, not just any old Europe for its own political sake. German Finance Minister Schaeuble, for example, has warned against "endless regulation," going as far as to say that among the "worst news I got as finance minister two years ago was that a big bio-chemistry company was shifting all its research from Europe to the US because of regulations coming from Brussels."

And it is not just in Germany that EU reform has caught the imagination. The Dutch government, for example, wants to reinforce the principle of subsidiarity, that action should be "European where necessary, national where possible", in the words of their (Labour) foreign minister. Similarly, Sweden, responding to growing Euro-realism in public and business opinion, has been increasingly vocal on the need for European reform. There is growing acceptance that Europe's entrepreneurs, employers and exporters have enough trouble finding their feet in the international market, without being tripped up by the tied shoelaces of red tape.

For a start, action is needed to implement the Services Directive across the EU, a reform that would sweep away barriers to competition, and make the EU incomparably more attractive both to beleaguered eurozone consumers and the UK's highly efficient service sector. By adopting a one-in, one-out requirement to ensure that any new regulations coming in are matched by regulations of similar economic burden going out, the EU would show that it is open for business. Indeed, it should go further, as we have in the UK, with a one-in, TWO-out approach. We have also seen a three-year moratorium on new regulations for small businesses, and labour market reforms such as apprenticeships. It is this approach that has helped put the UK on a path of faster growth than any other major EU economy.

So, we need to present better regulation proposals as the course of optimism and positivity that they are, rather than allow ourselves to be portrayed as awkward 'bad' Europeans for not wanting Brussels to decide everything to the nth degree. There are areas - not least the EU's telecommunications market - where Brussels can actually be applauded for helping to open up a single market across the union, and Commission President Barroso has rightly taken personal oversight over smarter regulation initiatives. Let us hope that the new Commission, due this year, will go further still.

If we can spread our positive vision of a reformed Europe in a global economy, EU reform will not just be possible, it will be unstoppable. By showing our neighbours what we can achieve domestically with deregulatory reform, we are leading by example. And if they don't follow? That will make any in/out referendum very interesting indeed.